Fifteen years in the trenches: Auditor–client negotiations exposed and explored

The study of auditor–client management (ACM) negotiations dates back 20 years with the publication of the first analytical model of negotiations in 1991. However, that article made next to no impact until Gibbins, Salterio and their later collaborators began a research programme on ACM negotiations in 1996. The purpose of this article is to review the 15 years of research on ACM negotiation including publishing, for the first time, the theoretical model that underlay their research programme. I then review the sequence of published articles focusing on Gibbins, Salterio and their co‐authors that led to the acceptance of the premise that the auditor co‐created the financial statements and related disclosures with client management. I call this ‘exposing the phenomena’ part of the article. I then examine the experimental research carried out over the last decade and relate it to both the underlying theoretical model and the descriptive model of ACM negotiating, identifying where research has been carried out and where important matters, both descriptively and theoretically, have received less research interest than their importance may warrant. Finally, I provide some thoughts as to how archival researchers may join into this research stream by suggesting the repurposing audit report delay construct as a measure of probability that ACM negotiations took place during the year‐end audit. Furthermore, I suggest how this delay measure might be improved using the newly popular text analysis comparison software that has recently come back in vogue in capital markets research. I call these sections ‘exploring the phenomena’. I conclude with a brief reminder about the practical significance of ACM negotiations, and I urge continued research on this important area, one that may threaten the future existence of audit firms more than any other.